Zambia Seeks New IMF Programme After Debt Restructuring as Economy Grows 5.4%

LUSAKA — Zambia is entering a different phase of its economic recovery. The economy grew by 5.4% in 2025, inflation fell to 6.1% in September 2026, foreign exchange reserves have strengthened and agreements have been reached on most of the external debt covered by the country's restructuring process. Now Lusaka is back in discussions with the International Monetary Fund for a successor programme, but the economic problem is no longer simply how to stabilise Zambia. It is how to turn that stability into investment, electricity, higher copper production, agricultural productivity and durable economic growth without rebuilding the debt vulnerabilities the country has spent years trying to resolve. The latest numbers show how significantly Zambia's macroeconomic position has changed. Final estimates from the Zambia Statistics Agency show that real GDP expanded by 5.4% in 2025, accelerating from 3.8% in 2024, while annual inflation declined to 6.1% in September 2026 from 6.2% in August. Food inflation fell to 5.8%. The inflation decline is particularly significant because Zambia entered 2026 with considerably stronger price pressures, while the recovery in economic activity has occurred alongside progress on debt restructuring and reserve accumulation. The IMF said in May that gross international reserves had reached $6.4 billion, equivalent to 4.4 months of prospective imports, while the primary fiscal balance recorded a surplus equivalent to 3.1% of GDP in 2025. Those improvements explain why Zambia's economic debate is beginning to change. For much of the period following its 2020 sovereign default, the immediate questions were about debt sustainability, access to external financing, inflation, fiscal consolidation and the ability of the government to restore basic macroeconomic credibility. The IMF programme approved in August 2022 was constructed around those problems, and its sixth and final review was completed in January 2026. The IMF said the programme had supported the restoration of macroeconomic stability and economic resilience, with total disbursements reaching about $1.7 billion by the completion of the arrangement. Zambia had also reached restructuring agreements covering about 94% of the external debt inside the restructuring perimeter by late 2025, although residual claims remained outstanding. The next stage is more difficult because macroeconomic stabilisation can be achieved through fiscal adjustment, monetary policy, debt negotiations and external financing, but productive transformation requires actual investment across the economy. Zambia needs new mines, additional electricity generation, better agricultural infrastructure, greater mineral processing, stronger domestic businesses and a broader export base. The country therefore enters discussions for another IMF arrangement from a better macroeconomic position but with essentially the same structural question that has confronted many commodity dependent African economies: whether a period of stability can be used to change the productive structure of the economy before another external shock exposes its vulnerabilities. Why Is Zambia Seeking Another IMF Programme After Debt Restructuring? An IMF mission arrived in Zambia on 30 September 2026 to begin discussions with the government on a new financial programme. The talks do not mean that a successor arrangement has already been agreed. They represent the continuation of discussions that had advanced earlier in the year before being scheduled to resume following Zambia's August elections. The government is seeking an arrangement that supports economic growth and investment while protecting the stabilisation gains made under the previous programme. This distinction matters because the objectives of a successor programme are already moving beyond emergency stabilisation. In May, the IMF said priorities identified for a new arrangement included preserving macroeconomic stability while shifting towards more inclusive and private sector led growth, economic diversification and higher productivity. It specifically identified copper value addition, energy constraints and investment in agribusiness, tourism and textiles among the areas capable of expanding domestic value addition and employment. That is a substantially different economic conversation from one focused predominantly on restructuring debt and rebuilding reserves. Zambia is effectively trying to move from repairing the state's balance sheet towards expanding the productive balance sheet of the wider economy. The difficulty is that stabilisation does not automatically produce this transition. Lower inflation can improve business planning, but it does not construct a power station. Higher reserves can reduce external vulnerability, but they do not automatically increase agricultural yields. Debt restructuring can reduce near term repayment pressure, but it does not by itself create new exports. A successful successor programme will therefore have to be judged not only by fiscal balances, inflation and debt ratios, but also by whether Zambia can use the improved macroeconomic environment to attract investment into sectors that increase production, exports and productivity. Zambia's Debt Has Been Restructured, But The Debt Problem Has Not Disappeared Zambia's restructuring has fundamentally altered its external debt profile, but it would be premature to interpret that process as the disappearance of debt risk. The IMF's 2026 debt sustainability assessment classified Zambia's public debt as sustainable while maintaining the country at high risk of both external and overall debt distress. Agreements had been reached on about 94% of claims inside the restructuring perimeter as of November 2025, leaving a smaller group of external commercial claims still to be resolved. The significance of the restructuring is therefore not that Zambia suddenly has no debt problem, but that maturities, interest costs and repayment obligations have been reorganised sufficiently to give the economy more space to recover. What Zambia does with that space will determine whether restructuring becomes a durable economic reset or merely postpones another period of fiscal pressure. The country has enormous infrastructure and development financing requirements, particularly in electricity, mining, agriculture and transport, which means avoiding borrowing altogether is neither realistic nor necessarily desirable. The more important question is what Zambia borrows for, under what terms, and whether the assets financed by new liabilities expand the productive and revenue generating capacity of the economy. Borrowing to finance infrastructure that raises exports, electricity supply or agricultural productivity has a fundamentally different long term economic effect from accumulating expensive liabilities without a corresponding increase in productive capacity. The fiscal position also requires continued attention. Although Zambia recorded a primary surplus of 3.1% of GDP in 2025, the IMF warned in May that fiscal pressures had intensified during 2026 and projected the primary surplus to fall to 1.1% of GDP without corrective measures. It pointed to external shocks, expenditure overruns and other spending pressures while arguing that additional revenue gains would be necessary to reduce the domestic interest burden and eventually move Zambia towards a moderate risk of debt distress. The successor IMF programme is therefore likely to operate within a difficult balance: Zambia needs more investment to accelerate growth, but it also needs enough fiscal discipline to prevent investment ambitions from recreating the debt pressures the restructuring was designed to resolve. Copper Can Drive Zambia's Next Growth Cycle, But Production Must Rise Much Faster Copper sits at the centre of Zambia's attempt to solve that equation because few sectors have the same capacity to simultaneously generate exports, foreign exchange, tax revenues and investment. Zambia produced just over 890,000 tonnes of copper in 2025, an increase of 7.8% from approximately 826,000 tonnes in 2024, according to figures presented to Parliament. The government is targeting annual production of three million tonnes by 2031, meaning that output would need to more than triple from the 2025 level within six years. The ambition reflects Zambia's position in a global economy that is becoming increasingly copper intensive. Electrification, electricity grids, renewable energy systems and other technologies associated with the global energy transition are increasing the strategic importance of copper, giving countries with large reserves an opportunity to attract investment and expand exports. Zambia's national copper strategy consequently goes beyond increasing mine output. It is designed to stimulate investment in exploration, mining, processing and the supply of goods and services, while improved geological information is expected to support further exploration and resource development. The larger economic question is how much value Zambia retains from a future increase in copper production. If output rises primarily as an extractive export activity, the country will gain foreign exchange, taxes and mining employment, but the wider structural effect will remain limited. If higher production is accompanied by mineral processing, local procurement, engineering services, logistics, domestic suppliers and investment in related industries, copper becomes the foundation for a broader industrial economy. Zambia's challenge is therefore not simply to produce three million tonnes. It is to increase the amount of domestic economic activity generated by every tonne it produces. That distinction is especially important for a country emerging from debt restructuring. Zambia needs export growth because stronger foreign exchange earnings improve its ability to service external obligations and accumulate reserves, but it also needs domestic value creation because fiscal sustainability ultimately depends on the size and productivity of the economy from which government revenue is collected. Copper can contribute to both objectives, but only if mining policy is connected to energy, infrastructure, skills, local suppliers and industrial development rather than treated as an isolated extractive sector. Zambia Cannot Reach Three Million Tonnes Of Copper Without Solving Electricity The copper target immediately exposes another constraint: electricity. Zambia's mining ambitions require substantially more reliable power at precisely the moment when energy shortages have demonstrated how vulnerable the economy remains to electricity disruptions. The IMF has explicitly identified energy supply constraints as one of the issues that must be addressed under Zambia's next phase of reforms, while the government has introduced measures including an electricity open access framework, net metering and changes to energy licensing. The economic relationship is straightforward. Mines consume large quantities of electricity, and mineral processing requires additional reliable power. Increasing copper production from around 890,000 tonnes towards three million tonnes therefore implies a major expansion in electricity demand. If generation and transmission investment fails to keep pace, energy becomes a ceiling on mining growth, manufacturing and wider private investment. Zambia cannot credibly pursue a large mining expansion while treating electricity shortages as a separate sectoral problem. This is also why investment in electricity has economic consequences well beyond mining. Additional generation and a stronger grid can support manufacturing, irrigation, food processing, services and households at the same time as supplying new mines. Zambia's energy challenge can therefore become part of its diversification strategy if investment is designed around the wider productive economy. The alternative is a cycle in which copper investment increases electricity demand faster than supply, forcing the country to ration an input that every other productive sector also requires. Agriculture Shows Both Zambia's Potential And Its Vulnerability Agriculture provides the other side of Zambia's recovery story. The sector rebounded strongly after improved rainfall following severe drought conditions, with Zambia recording a maize harvest of 3.66 million tonnes in the 2024/25 farming season. Government reporting attributes the improvement not only to rainfall but also to extension services, the national rollout of the electronic voucher system under the Farmer Input Support Programme, rehabilitation of dams and expansion of irrigation. The recovery demonstrates why agriculture can make a significant contribution to Zambia's growth, but it also illustrates the danger of allowing agricultural performance to remain excessively dependent on weather. Zambia is vulnerable to two different forms of economic concentration: copper dominates the external economy while rainfall remains capable of determining large movements in agricultural production, food availability and electricity generation through the country's dependence on hydropower. A drought can therefore affect farms, food prices, electricity supply, mining and fiscal performance at the same time. The IMF has consequently identified climate vulnerability, drought and energy shocks as continuing risks to growth and fiscal resilience. The structural response is not to reduce the importance of agriculture, but to make agriculture less dependent on rainfall and more productive when conditions are favourable. Irrigation, storage, rural electricity, transport, processing and access to markets can turn agricultural recovery into a more stable source of output and exports. This is where Zambia's mining and agricultural strategies eventually converge: both require infrastructure, electricity, finance and a policy environment capable of attracting long term private investment. Zambia Now Has To Turn Macroeconomic Stability Into Productive Growth The most important achievement of Zambia's previous IMF chapter may therefore be the time it has created for the country to address these deeper constraints. The previous programme helped Zambia move through an extraordinary period of debt negotiations, fiscal adjustment and macroeconomic instability. By March 2026, the IMF said public external debt had been largely restructured, international reserves had strengthened, economic growth had picked up and inflation was declining. By September, annual inflation had fallen to 6.1%, while final national statistics placed 2025 economic growth at 5.4%. But the next stage will demand a different measure of success. Zambia can no longer judge economic progress primarily by how far inflation has fallen or how much debt has been restructured. The more consequential indicators will increasingly be how quickly electricity generation expands, whether copper production moves convincingly towards the three million tonne target, whether more mineral value is retained domestically, whether agriculture becomes less vulnerable to rainfall, whether private investment rises and whether growth creates enough productive employment and government revenue to strengthen the country's ability to finance its own development. That is why the successor IMF negotiations matter beyond the size of any new programme. Zambia is moving from a period in which the overriding objective was restoring macroeconomic stability into one in which stability has to become an input into economic transformation. The country has already demonstrated that debt terms can be renegotiated, reserves rebuilt and inflation brought down. What remains unproven is whether those gains can support an economy that produces substantially more, exports substantially more and becomes resilient enough that the next external shock does not return it to the same debt and fiscal pressures. Debt restructuring can buy a country time. Only productive growth can make that time count. FAQ Why is Zambia seeking a new IMF programme in 2026? Zambia is discussing a successor IMF supported arrangement after completing its previous Extended Credit Facility programme in January 2026. The IMF and Zambian authorities have identified priorities including maintaining macroeconomic stability, increasing productivity, supporting private sector led growth, addressing electricity constraints and increasing domestic value addition. An IMF mission arrived in Zambia on 30 September 2026 to continue discussions, but a new programme had not yet been agreed. How fast did Zambia's economy grow in 2025? Final estimates from the Zambia Statistics Agency show that Zambia's economy grew by 5.4% in 2025, compared with 3.8% in 2024. What is Zambia's inflation rate in September 2026? Annual inflation fell to 6.1% in September 2026 from 6.2% in August. Annual food inflation declined to 5.8%. Has Zambia completed its debt restructuring? Zambia has completed most, but not all, of the restructuring process. IMF documents state that agreements had been reached covering approximately 94% of external debt claims within the restructuring perimeter as of November 2025, while residual commercial claims remained outstanding. How much copper does Zambia produce? Zambia produced just over 890,000 tonnes of copper in 2025, up 7.8% from approximately 826,000 tonnes in 2024. The government is targeting annual production of three million tonnes by 2031. Why is electricity important to Zambia's copper strategy? Copper mining and mineral processing require large amounts of reliable electricity. Zambia's attempt to increase copper production towards three million tonnes a year will therefore require substantial additional generation and transmission capacity. The IMF has identified alleviating energy supply constraints as one of the priorities for supporting investment, domestic value addition and growth.